During the period under review, 50 new and renewed war-risk and expropriation insurance policies were issued on consigned exports of cotton and tobacco valued at $2.1 million.

Private participation

In November 1964, the Bank sold to financial institutions its fourth series of portfolio participation certificates in the amount of $450 million. These "series D" participation certificates are fully guaranteed by the Bank and bear interest at the rate of 42 percent with the principal repayable in seven years beginning May 27, 1965. Additional private participation in the Bank's activities during JulyDecember 1964 consisted of purchases totaling $18 million by U.S. commercial banks and suppliers for their own account and risk of early maturities in Bank credits.

FISCAL RESULTS

During the 6 months ended December 31, 1964, new dollar commitments authorized and guarantees issued by the Bank together with insurance authorized for issuance by FCIA totaled $881.4 million. Bank disbursements were $174.2 million, and the Bank received $137.4 million in repayment of principal. The gross income for the period was $90 million and comprised interest on loans of $88.3 million and insurance premiums and guarantee fees of $1.7 million. The Bank paid $10 million in interest on money borrowed from the U.S. Treasury and $19.3 million in interest to holders of Bank portfolio participation certificates. Operating and other expenses were $2.6 million. The resulting net income of $58.1 million was added to the Bank's reserves and undistributed earnings which reached a cumulative total of $938.3 million on December 31, 1964.

STATUS OF BANK RESOURCES

On December 31, 1964, the total lending authority of the ExportImport Bank was $9 billion. Loans outstanding totaled $3,472.3 million, while undisbursed authorizations were $1,900.9 million. Other charges against the Bank's lending authority included: $310.2 million representing short- and medium-term guarantee, FCIA, and war risk insurance programs; and a $26.9 million contingent liability on notes sold with recourse. As a result, the uncommitted lending authority of the Bank was $3,289.7 million on December 31, 1964.

Part XIII

THE INTERNATIONAL INFORMATION, EDUCATIONAL EXCHANGE, AND CULTURAL AFFAIRS PROGRAMS

[See also post, doc. XIV-4.]

Document XIII-1

"The Single Most Important and Most Effective Instrument in the Ideological Conflict is the President Himself": STATEMENT MADE BY THE UNDER SECRETARY OF STATE FOR POLITICAL AFFAIRS (HARRIMAN) BEFORE A SUBCOMMITTEE OF THE HOUSE COMMITTEE ON FOREIGN AFFAIRS, JANUARY 13, 1964 (EXCERPT)1

2

Chairman Khruschev has made it perfectly clear that whatever agreements may be reached on specific matters of mutual concern between us, "there can be no coexistence in ideology, that conflict goes on." We must believe him, and act accordingly. We are doing so, and I believe we are doing so effectively. We are, I believe, winning the ideological struggle. But obviously, as in any fight, while our opponents are taking a lot of damaging blows, we have to expect and are taking a few.

I would like, if I may, to congratulate this subcommittee for its painstaking attention to this truly important subject. In the course of your hearings, you have heard a great deal about the varied activities of our Government in this field. May I give you some of my own personal observations.

First, it is clear that the single most important and most effective instrument in the ideological conflict is the President himself. His decisions and his statements set the tone and determine the guidelines within which our foreign policy develops. As the President's principal adviser on foreign affairs and as the instrument through which

1 Winning the Cold War-The U.S. Ideological Offensive: Hearings Before the Subcommittee on International Organizations and Movements of the Committee on Foreign Affairs, U.S. House of Representatives, 88th Congress, 2d Session, pt. VI, "U.S. Government Agencies and Programs: Department of State, U.S. Information Agency," Jan. 13, 14, and Feb. 20, 1964, pp. 712–716.

2 See American Foreign Policy: Current Documents, 1963, p. 528, footnote 31.

Presidential decisions are carried into actions, the Secretary of State bears heavy responsibilities in this field. Once decisions are made, it is up to the rest of us-in the State Department, in USIA, and in all other departments and agencies-to see that they are carried out in the most efficient and effective manner.

Three general propositions are basic to our approach to all of our informational and cultural programs in support of our foreign policies:

(1) We are convinced that what we do and the way we do it are more important in conveying our purposes than what we say;

(2) We believe in the broadest possible dissemination of information about our policies and actions, except where the most serious security considerations are involved;

(3) We heartily endorse the statement you heard some months ago from Ed Murrow, the Director of USIA:

American traditions and the American ethic require us to be truthful, but the most important reason is that truth is the best propaganda and lies are the worst. To be persuasive we must be believable; to be believable we must be credible; to be credible we must be truthful. It is as simple as that.3

I want to say that Ed Murrow and I both got our training in the World War and at that time it was easier to gage the results of our efforts in this field.

There has been considerable discussion here of the objectives of our foreign policy. It seems to me that the broad goals are apparent. We seek to encourage what our late President, John Kennedy, described as

a peaceful world community of free and independent states, free to choose their own future and their own system so long as it does not threaten the freedom of others.*

We see our country a strong, democratic, dynamic nation worthy of the confidence of our friends and the respect of our enemies. We are not interested in fostering poor imitations of the American system in other lands; rather do we stress the harmony of our broad objectives with those of the vast majority of mankind. We try to lay a base of cooperation and trust in the great areas of overlapping interests that join us with our fellow men in all lands. And finally, we try actively to expose and to counter the hostile efforts of the Communists and others to distort our policies or frustrate our achievements. Let me say a few words about my personal role in this general

area.

As you know, the Under Secretary for Political Affairs has certain responsibilities for "giving guidance and direction to the opera

3

Statement of Mar. 28, 1963: text in Winning the Cold War-The U.S. Ideological Offensive: Hearings Before the Subcommittee on International Organizations and Movements of the Committee on Foreign Affairs, U.S. House of Representatives, 88th Congress, 1st Session, pt. I, Mar. 28, 29, Apr. 2 and 3. 1963, pp. 2-6 (quotation on p. 4).

4

Quotation from the annual message of Jan. 11, 1962, by President Kennedy on the state of the Union; text in American Foreign Policy: Current Documents, 1962, pp. 1-8 (quotation on p. 1).

tional aspects of policy planning and to political-military policy, and psychological strategy matters.

This is a team effort and many individuals and many organizations are involved. The three most important areas of operation in this field are represented by my colleagues here-the Public Affairs Bureau, the Policy Planning Council, and the Bureau of Educational and Cultural Affairs.

I speak of them as the most important within the State Department. In addition, I have a special assistant, Mr. William Jorden, who devotes much time to the matter of psychological programs in support of foreign policy. He directs the work of a small interdepartmental group on which are represented the principal agencies involved in informational work-Public Affairs, Research, USIA, Defense, and CIA. Their purpose is to develop and coordinate long-range programs in support of U.S. policy.

I know this committee is deeply interested in the question of coordination of programs and activities in the nonmilitary and noneconomic field. We can go into the details later, if you like, but now let me just say that it has been my experience that coordination depends mainly on individuals and not on organizational charts. Able and flexible men will coordinate their work, however unwieldy the bureaucratic system; the most orderly organization will not produce coordination with incompetent and stubborn individuals.

I am not suggesting we should have such a cumbersome system. We want to try to obtain the best organization possible but I do want to emphasize that it is impossible to get an organization chart that is foolproof, and a great deal of cooperation must depend upon the competence and attitude of the individuals involved in this whole enterprise.

We think that by and large we have able people in this field and that the cooperation and coordination is close and effective.

Document XIII-2

Report of the U.S. Advisory Commission on International Educational and Cultural Affairs on the East-West Center, MARCH 16, 1964 (EXCERPTS)5

5

Report of the U.S. Advisory Commission on International Educational and Cultural Affairs on the East-West Center, prepared by Roy E. Larsen and Dr. James M. Davis, Mar. 16, 1964, pp. 1, 40-43. The membership of the U.S. Advisory Commission on International Educational and Cultural Affairs at the time of the submission of this report was as follows:

John W. Gardner, Chairman, President, Carnegie Corp. of New York

Roy E. Larsen, Vice Chairman, Chairman, Executive Committee, Time, Inc.
Walter Adams, Professor of Economics, Michigan State University
Luther H. Foster, President, Tuskegee Institute

Rev. Theodore M. Hesburgh, President, University of Notre Dame

Walter Johnson, Professor of History, University of Chicago

Franklin D. Murphy, Chancellor, University of California at Los Angeles Mabel M. Smythe, Principal, New Lincoln High School, New York, N.Y. James A. Donovan, Jr., Staff Director, State Department, Washington, D.C. 20520.

The Center for Cultural and Technical Interchange Between East and West, commonly known as the East-West Center, is a national institution dedicated to greater understanding among the peoples and countries of the Pacific area.

Barely three years old," the East-West Center has made a remarkable record of developing cultural, technical and educational interchange among the countries it serves. Perhaps more important, however, is the potential that the Center has made evident for even more significant contributions to mutual help and understanding. The primary objectives of the study conducted by the U.S. Advisory Commission and of this report have been to explore those potentials and to seek out the best methods of implementing them.

The following are the recommendations of the Commission:

1. That the present relationship between the East-West Center and the University of Hawaii be maintained, except that the Chancellor of the East-West Center should be under the administrative responsibility of the President of the University of Hawaii, as originally recommended by the Kerr Committee. (The Chancellor) "should have authority in matters directly concerning the Center, and should be held accountable for the Center's results. His duties would include the preparation and control of Center budgets, negotiation of contracts, public relations, and the development of cooperative arrangements with scholars and institutions on the mainland and throughout Asia." The Board of Regents of the University of Hawaii should continue to be the agency through which the East-West Center receives its funds. 2. That a national advisory and review body, to be known as the National Review Board and to provide formal representation of the national interest, be appointed and that its responsibilities be set forth by an executive order of the President of the United States or by such other action as seems appropriate. The Commission suggests the following with regard to this board:

A. Proposed Composition. The board would consist of eleven members, as follows:

a. The Governor of Hawaii

b. The Assistant Secretary of State for Educational and Cultural Affairs

c. a member nominated by the Governor of Hawaii;

d. the Commissioner of Education, Department of Health, Education and Welfare;

• Established Nov. 8, 1960; see p. 3 of this report; and American Foreign Policy: Current Documents, 1960, pp. 850-851, 886-887.

7

Reference to a committee of consultants, Clark Kerr, chairman, which reported to the Board of Regents of the University of Hawaii on the organization and program of the East-West Center, June 1961.

President Johnson in releasing this report designated Governor John A Burns of Hawaii to be Chairman of the National Review Board which was subsequently appointed, Feb. 24, 1965.